Trump administration to garnish wages of 5.3 million defaulted student loan borrowers this summer

The Trump administration resumed assortment efforts on defaulted student loans Monday after a roughly five-year hiatus — and affected borrowers may start feeling the monetary penalties prior to specialists anticipated.

The U.S. Division of Schooling launched new particulars on what actions it plans to take, when.

This is what to know.

The Treasury Division will ship notices to 5.3 million defaulted borrowers concerning the assortment exercise of their wages “later this summer,” the Schooling Division wrote within the Monday press launch.

Because the pandemic started in March 2020, assortment exercise on federal student loans has principally been paused. The Biden administration targeted on extending reduction measures to struggling borrowers within the wake of the Covid pandemic and serving to them to get present.

The Trump administration’s aggressive assortment exercise is a pointy flip away from that technique, specialists say.

“Borrowers ought to pay again the money owed they tackle,” mentioned U.S. Secretary of Schooling Linda McMahon in a video posted on X on April 22.

The U.S. authorities has extraordinary assortment powers on federal money owed and it could actually seize borrowers’ federal tax refunds, wages, and Social Safety retirement and incapacity advantages.

However previously, student loan borrowers have been normally given 65 days’ discover earlier than the garnishment of their federal advantages, mentioned greater training skilled Mark Kantrowitz.

“Odd that they are saying a 30-day discover,” Kantrowitz mentioned.

Traditionally, the offsets to folks’s retirement and incapacity advantages have been additionally “a final resort,” Kantrowitz mentioned, “occurring a yr after wage garnishment and different makes an attempt at assortment had failed.”

“Given the timing, it appears like they aren’t pursuing the traditional due diligence schedule for gathering defaulted federal student loans,” Kantrowitz added.

The U.S. Division of Schooling didn’t instantly reply to a request for remark.

Carolina Rodriguez, director of the Schooling Debt Client Help Program in New York, not too long ago informed CNBC that she was particularly involved concerning the penalties of resumed collections on retirees.

“Dropping a portion of their Social Safety advantages to repay student loans may imply not having sufficient for meals, transportation to medical appointments or different fundamental requirements,” Rodriguez mentioned in an April interview.

There are some 2.9 million folks ages 62 and older with federal student loans, as of the primary quarter of 2025, in accordance to Schooling Division knowledge. That is a 71% enhance from 2017, when there have been 1.7 million such borrowers.

Borrowers in default will obtain emails making them conscious of the brand new coverage, the Schooling Division mentioned. You’ll be able to contact the federal government’s Default Decision Group and pursue a quantity of completely different avenues to get present in your loans, together with enrolling in an income-driven reimbursement plan or signing up for loan rehabilitation. 

Some borrowers might also be eligible for deferments or a forbearance, that are other ways to pause your funds, Rodriguez mentioned.

“We’re advising purchasers to request a retroactive forbearance to cowl missed funds, and a short lived forbearance till they will get enrolled in an income-driven reimbursement plan,” she mentioned.

Are you in danger of assortment exercise since you’re behind in your student loans? In the event you’re keen to share your expertise for an upcoming story, please electronic mail me at annie.nova@nbcuni.com